Himax Technologies, Inc. (NASDAQ:HIMX) Just Reported And Analysts Have Been Cutting Their Estimates
Last week, you might have seen that Himax Technologies, Inc. (NASDAQ:HIMX) released its first-quarter result to the market. The early response was not positive, with shares down 4.4% to US$3.25 in the past week. Results were roughly in line with estimates, with revenues of US$185m and statutory earnings per share of US$0.019. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Himax Technologies after the latest results.
See our latest analysis for Himax Technologies
After the latest results, the four analysts covering Himax Technologies are now predicting revenues of US$737.8m in 2020. If met, this would reflect a credible 6.5% improvement in sales compared to the last 12 months. Statutory losses are anticipated to increase substantially, hitting US$0.04 per share. Before this earnings report, the analysts had been forecasting revenues of US$819.1m and earnings per share (EPS) of US$0.12 in 2020. There looks to have been a significant drop in sentiment regarding Himax Technologies' prospects after these latest results, with a minor downgrade to revenues and the analysts now forecasting a loss instead of a profit.
The consensus price target fell 8.6% to US$4.67, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Himax Technologies, with the most bullish analyst valuing it at US$5.50 and the most bearish at US$3.80 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. For example, we noticed that Himax Technologies' rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 6.5%, well above its historical decline of 2.3% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 9.0% per year. Although Himax Technologies' revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts are expecting Himax Technologies to become unprofitable next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Himax Technologies' future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Himax Technologies analysts - going out to 2021, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Himax Technologies (at least 1 which doesn't sit too well with us) , and understanding these should be part of your investment process.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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